What is the effect on the AAA if an S corporation distributes a piece of property valued at $10,000 with a $5,000 basis to 50 percent shareholder and $10,000 cash to the other 50 percent shareholder in a nonliquidating distribution?
A)$10,000 net increase
B)$5,000 net increase
C)$15,000 net decrease
D)$20,000 net decrease

Question

Quizplus · Accepted Answer

The Accumulated Adjustments Account (AAA) decreases by the total distribution amount of $20,000 ($10,000 in property plus $10,000 in cash), resulting in a $15,000 net decrease after accounting for the $5,000 basis of the property.

What Is the Effect on the AAA If an S